XML 39 R20.htm IDEA: XBRL DOCUMENT
v3.19.3

INCOME TAXES | 12 Months Ended
--- | ---
Sep. 28, 2019
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES The following table reflects U.S and foreign income before income taxes for fiscal 2019, 2018, and 2017:
| Fiscal
(in thousands) | 2019 |  | 2018 |  | 2017
United States | $ | (14,125 | ) |  | $ | 25,211 |  |  | $ | (4,114 | )
Foreign | 48,812 |  |  | 152,338 |  |  | 122,629 |
Income before tax | $ | 34,687 |  |  | $ | 177,549 |  |  | $ | 118,515 |
The following table reflects the current and deferred components of provision for (benefit from) income taxes for fiscal 2019, 2018, and 2017:
| Fiscal
(in thousands) | 2019 |  | 2018 |  | 2017
Current: |  |  |  |  |
Federal | $ | 6,580 |  |  | $ | 83,159 |  |  | $ | (3,975 | )
State | 214 |  |  | 58 |  |  | 64 |
Foreign | 6,384 |  |  | 16,980 |  |  | 13,290 |
Deferred: |  |  |  |  |
Federal | 2,959 |  |  | 23,346 |  |  | (15,374 | )
State | — |  |  | (2 | ) |  | 40 |
Foreign | 6,773 |  |  | (2,797 | ) |  | (1,439 | )
Provision for (benefit from) income taxes | $ | 22,910 |  |  | $ | 120,744 |  |  | $ | (7,394 | )
The following table reconciles the provision for (benefit from) income taxes with the expected income tax provision computed based on the applicable U.S. federal statutory tax rate for fiscal 2019, 2018, and 2017:
| Fiscal
(dollar amounts in thousands) | 2019 |  | 2018 |  | 2017
Expected income provision based on the U.S. federal statutory tax rate | $ | 7,284 |  |  | $ | 43,568 |  |  | $ | 41,358 |
Effect of earnings of foreign subsidiaries subject to different tax rates | (4,335 | ) |  | (12,947 | ) |  | (22,832 | )
Benefit from tax incentives | (5,084 | ) |  | (20,429 | ) |  | (23,294 | )
Benefit from research and development tax credits | (3,041 | ) |  | (2,785 | ) |  | (1,859 | )
Benefit from foreign tax credits | (22,744 | ) |  | (3,939 | ) |  | (26,119 | )
U.S. one-time transition tax | 9,369 |  |  | 101,854 |  |  | — |
Remeasurement of deferred taxes | 5,480 |  |  | 2,760 |  |  | — |
Non-deductible goodwill impairment | — |  |  | — |  |  | 8,805 |
Valuation allowance | 25,289 |  |  | 7,366 |  |  | 6,458 |
Foreign operations (withholding taxes, taxes on unrepatriated foreign earnings, and deemed dividends) | 8,578 |  |  | 5,746 |  |  | 6,039 |
Unrecognized tax benefit | 156 |  |  | 530 |  |  | 2,936 |
Non-deductible items | 2,248 |  |  | (758 | ) |  | 778 |
Other, net | (290 | ) |  | (222 | ) |  | 336 |
Provision for (benefit from) income taxes | $ | 22,910 |  |  | $ | 120,744 |  |  | $ | (7,394 | )
Effective tax rate | 66.0 | % |  | 68.0 | % |  | (6.2 | )%
On December 22, 2017, the TCJA was signed into law. Among the many U.S. tax law changes, the TCJA reduced the U.S. federal statutory tax rate from 35% to 21%, imposed a one-time transition tax on deemed repatriation of previously untaxed accumulated earnings and profits of certain foreign subsidiaries, and created a new foreign minimum tax. In accordance with Staff Accounting Bulletin No. 118 ("SAB 118"), the accounting for the tax effects of the TCJA was completed in the first quarter of fiscal 2019. In fiscal 2019, the Company recorded an additional tax expense of $9.4 million due to newly issued TCJA regulations and guidance on the computation of the U.S. one-time transition tax. The Company recognized an aggregate tax expense for fiscal 2018 and 2019 of $114.0 million, comprised primarily of $2.8 million from the re-measurement of U.S. deferred tax assets and liabilities to reflect the decrease in the U.S. federal statutory tax rate in fiscal 2018, and $111.2 million related to the U.S. one-time transition tax on deemed repatriation of previously untaxed accumulated earnings and profits of certain foreign subsidiaries, net of related foreign tax credits and unrecognized tax benefit in fiscal 2018 and 2019. The Company also recorded $5.5 million in fiscal 2019 to revalue certain foreign deferred assets and liabilities to reflect enacted foreign statutory tax rates in Singapore and the Netherlands. During fiscal 2019, the Company completed its evaluation of the future cash needs of its U.S. and foreign operations, the alignment of cash balances with the Company’s long-term capital allocation strategy, and the impact of the TCJA which generally allows U.S. corporations to make distributions without incurring additional U.S. income tax. As a result of this reassessment, a portion of the Company’s undistributed foreign earnings are no longer deemed to be indefinitely reinvested outside the U.S. as of September 28, 2019. The Company recorded $0.7 million of tax expense in the second quarter of fiscal 2019 as part of the initial change in assertion and $1.8 million of tax expense cumulatively by the end of fiscal 2019 primarily due to subsequent changes in foreign exchange rates from the date of the initial change. Further, we operate in a number of foreign jurisdictions, including Singapore, where we have a tax incentive that allows for a reduced tax rate on certain classes of income, provided the Company meets certain employment and investment conditions through the expiration date in fiscal 2020. This tax incentive arrangement may be renewed subject to the agreement of the Singapore government on additional requirements that must be satisfied. In fiscal 2019, 2018, and 2017, the tax incentive arrangement helped to reduce the Company’s provision for income taxes by $5.0 million or $0.08 per share, $20.4 million or $0.29 per share and $23.3 million or $0.33 per share, respectively. The following table reflects deferred tax balances based on the tax effects of cumulative temporary differences for fiscal 2019 and 2018:
| Fiscal
(in thousands) | 2019 |  | 2018
Accruals and reserves | $ | 5,514 |  |  | $ | 6,652 |
Tax credit carryforwards | 23,448 |  |  | 4,532 |
Net operating loss carryforwards | 36,050 |  |  | 39,856 |
Gross deferred tax assets | $ | 65,012 |  |  | $ | 51,040 |
Valuation allowance | $ | (58,411 | ) |  | $ | (37,249 | )
Deferred tax assets, net of valuation allowance | $ | 6,601 |  |  | $ | 13,791 |
Taxes on undistributed foreign earnings | $ | (24,542 | ) |  | $ | (21,988 | )
Fixed and intangible assets | (7,704 | ) |  | (8,377 | )
Deferred tax liabilities | $ | (32,246 | ) |  | $ | (30,365 | )
Net deferred tax liabilities | $ | (25,645 | ) |  | $ | (16,574 | )
Reported as |  |  |
Deferred tax assets | $ | 6,409 |  |  | $ | 9,017 |
Deferred tax liabilities | (32,054 | ) |  | (25,591 | )
Net deferred tax liabilities | $ | (25,645 | ) |  | $ | (16,574 | )
As of September 28, 2019, the Company has foreign net operating loss carryforwards of $110.6 million, state net operating loss carryforwards of $146.5 million, and U.S. federal and state tax credit carryforwards of $7.8 million that can be used to offset future income tax obligations. These net operating loss and tax credit carryforwards can be utilized prior to their expiration dates in fiscal years 2020 through 2035, with the exception of certain credits and foreign net operating losses that can be carried forward indefinitely. The Company has recorded valuation allowances against certain foreign and state net operating loss carryforwards and state tax credits which are expected to expire unutilized. The Company continues to evaluate the realizability of its net deferred tax assets at each reporting date and records a benefit for deferred tax assets to the extent it has projected future taxable income or deferred tax liabilities that provide a source of future income to benefit such deferred tax assets. As a result of this analysis, the Company continues to maintain a valuation allowance against certain state and foreign deferred tax assets as the realization of these assets is not more likely than not given uncertainty of future apportioned earnings in these jurisdictions. The following table reconciles the beginning and ending balances of the Company's unrecognized tax benefit, excluding related accrued interest and penalties, for fiscal 2019, 2018, and 2017:
|  | Fiscal
(in thousands) |  | 2019 |  | 2018 |  | 2017
Unrecognized tax benefit, beginning of year |  | $ | 13,038 |  |  | $ | 12,062 |  |  | $ | 7,453 |
Additions for tax positions, current year |  | 410 |  |  | 1,482 |  |  | 3,657 |
Additions for tax positions, prior year |  | — |  |  | — |  |  | 1,834 |
Reductions for tax positions, prior year |  | (523 | ) |  | (506 | ) |  | (882 | )
Unrecognized tax benefit, end of year |  | $ | 12,925 |  |  | $ | 13,038 |  |  | $ | 12,062 |
The Company recognizes interest and penalties related to potential income tax liabilities as a component of unrecognized tax benefit and in provision for income taxes. For the fiscal year ended September 28, 2019, the Company recognized $1.4 million of accrued interest and penalties related to unrecognized tax benefit. The amount of interest and penalties related to unrecognized tax benefit recorded in the provision for income taxes was not material for any period presented. As of September 28, 2019, approximately $13.1 million of unrecognized tax benefit, including related interest and penalties, if recognized, would impact the Company's effective tax rate. It is reasonably possible that the amount of the unrecognized tax benefit with respect to certain unrecognized tax positions will increase or decrease during the next 12 months due to the expected lapse of statutes of limitation and/or settlements of tax examinations. Given the number of years and numerous matters that remain subject to examination in various tax jurisdictions, we cannot practicably estimate the financial outcomes of these examinations. The Company files a U.S. federal income tax return, as well as income tax returns in various state and foreign jurisdictions. For U.S. federal income tax returns purposes, tax years following fiscal 2016 remain subject to examination. For most state tax returns, tax years following fiscal 2001 remain subject to examination as a result of the generation of net operating loss carry-forwards. In the foreign jurisdictions where the Company files income tax returns, the statutes of limitations with respect to these jurisdictions vary from jurisdiction to jurisdiction and range from 4 to 6 years. The Company's foreign tax returns are currently under examination by tax authorities in multiple foreign jurisdictions. The Company believes that adequate provisions have been made for any adjustments that may result from the examination.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration